The World Bank has cut its forecast for global economic growth in 2569 to 2.5%, warning that war could drag it down to 1.3%.

The World Bank has lowered its forecast for global economic growth in 2569 to 2.5% due to the impact of the Middle East conflict. It warned that if the crisis escalates, growth could slow to as low as 1.3%.

June 12, 2569 at 00.59:XNUMX a.m., Reuters reported that The World Bank has lowered its forecast for global economic growth in 2569 to 2.5%. They argued that the war in the Middle East has put pressure on the global economy through soaring energy prices, accelerating inflation, and risks to financial stability.

Global Economic Prospects Report The latest version states that: The global economy is projected to grow by 2.9% in 2568, 0.2 percentage points higher than the World Bank's January forecast. However, for 2569, the World Bank has lowered its forecast by 0.1 percentage points to 2.5%, the lowest level since the COVID-19 pandemic.

The World Bank has lowered its economic forecasts for nearly two-thirds of countries worldwide, with the most affected being the United Arab Emirates (UAE), Iraq, and several Middle Eastern countries that rely heavily on energy export revenues.

The war that erupted following the US and Israeli attacks on Iran on February 28th and has dragged on for four months has resulted in the closure of the Strait of Hormuz, impacting global oil shipments and driving energy prices up rapidly. Fertilizer prices have also risen, raising concerns about food security in many countries.

The World Bank, in its baseline scenario, projects an average Brent crude oil price of $94 per barrel this year, a 36% increase from last year, and expects the energy supply disruptions to ease by the end of July, resulting in an average global inflation rate of 4%.

However, if the energy supply problems persist and the average annual oil price surges to $115 per barrel, global economic growth could slow to just 2.1%, while inflation could rise to 4.4%.

In a worst-case scenario, if the energy crisis spills over into financial markets and undermines global investor confidence, the global economy could grow by only 1.3%.

Ayhan Kose, Deputy Chief Economist of the World Bank. said These risks reflect the fact that global economic trends could weaken rapidly if pressures from the energy sector and financial markets impact each other.

while Indermit Gill, Chief Economist of the World Bank. specify that Although the global economy is projected to recover to a rate of 2.8% during 2570-2571, it will still be about 0.4 percentage points below the 2010s average due to several structural factors such as slower population growth, weak private and public investment, higher levels of public debt, and declining global trade growth.

"The global economy today is more fragile than it was in both 2551 and 2561." Gill said, with the expectation that... The coming years will continue to face policy uncertainty, high inflation, and high interest rates.

The report also states that Developing countries are facing greater pressure than developed countries. Their economies are projected to grow by only 3.6% in 2569, down from 4.4% in 2568, and many are experiencing a lost decade due to their inability to close the per capita income gap compared to developed countries.

For major economies, the World Bank maintains its growth forecast for the United States at 2.2% in 2569. The Eurozone is expected to expand by 0.8%, down from 1.4% in 2568, while Japan is projected to grow by 0.7%, down from 1.1% last year.

China's growth forecast for 2569 has been lowered by 0.2 percentage points to 4.2%, after the economy expanded by 5% in 2568.

The region most severely affected. These include the Middle East, North Africa, Afghanistan, and Pakistan. The World Bank has lowered its growth forecast for 2569 by 2.7 percentage points, to just 1.6%, from 4% in 2568, even though it expects the economy to recover and grow by 5% in 2570.

While the Indian economy remains the strongest among major economies, the World Bank forecasts it to grow by 6.6% in 2569, after expanding by 7% in 2568, and is likely to maintain high growth rates for several decades to come.

refer : www.reuters.com

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